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Our Biggest Lesson from the Financial Crisis // Don’t Bank on Going Back to Work

Quick note: We will have a post next Monday despite the July 4th holiday (maintaining that streak!), followed by our quarterly financial update on Wednesday. It’s likely to be less rosy than it would have been with a different Brexit vote outcome, but still lots of great stuff to report! Here’s the update from the first quarter of 2016. 

Though the financial crisis of 2008 and the years that followed certainly scarred all of us one way or another, it’s now been long enough that I often find myself thinking of it all in mostly positive terms. It allowed us to buy our first place, and to get our forever home for a downright steal. Or, Sure, our account balances went down, but we didn’t need that money right then, so no harm done. And, most of all, We were lucky and didn’t lose our jobs, so never really felt it.

That “never really felt it” sentiment is pretty scary, because it could easily lull us into thinking that major recessions are not a huge deal, and are a just a time when we want to avoid selling off too many shares of stock. That’s what cash reserves are for, right? No problem! Or, worse, revising history to remember only what came later. Stocks on sale followed by record S&P growth? Recessions are great!

Of course the reality is that the 2008 crisis is called a crisis for a reason: millions of people lost their jobs and their homes, huge volumes of money were erased from world markets, and lots of retired people living off their investments found themselves in a terrifying place. And there’s a huge human cost to all of that: suicide rates went way up, as did rates of homelessness and poverty. While we’d all like to believe that regulators have cleaned up Wall Street and other world financial capitals, each and every one of us knows that it could all happen again. It will happen again.

Remembering the Lessons of the Crisis

Our little microcosm of the two of us weathered the 2008 crisis pretty much unscathed. If anything, we benefited from it, because the burst housing bubble brought home prices down enough that we were finally willing to jump into the market. But we only had to look beyond our own noses to see lots of people affected. We both lost coworkers to layoffs, we know people whose homes were foreclosed on, and plenty of people we know struggled to find new work. Others couldn’t sell homes they were eager to move out of, some had to go through short sales which destroyed their credit, and others spent all their home equity.

If we only look at our own tiny experience of the crisis, we’ll be exactly those people George Santayana was talking about when he said, “Those who cannot remember the past are condemned to repeat it.” Being condemned to repeat the past sounds like a pretty crappy way to spend our early retirement, so we’ll focus on remembering instead.

We took quite a few lessons from the financial crisis, even if we learned them second-hand, including:

  • Borrowing against home equity is playing with fire
  • If you can’t afford a traditional, fixed-rated mortgage with 20 percent down, you can’t afford that home
  • All debt has the potential to steal your freedom
  • You will never go wrong saving for a rainy day, especially if you keep some cushion in cash
  • And…

OurNextLife.com // Our Biggest Lesson from the Financial Crisis of 2008? Early retirees can't bank on being able to go back to work if we need to! // Early Retirement, Financial Independence, Mountain Living, Adventure, Simplicity

Our Biggest Lesson: There Won’t Always Be Work

We had friends who got laid off during the crisis who spent years — YEARS — looking for work afterward. Qualified, eager, hard-working friends. Friends who hated collecting unemployment, who went after every open position with enthusiasm. And that still wasn’t good enough to get so much as an interview most of the time. There are a whole bunch of reasons for that:

1. Recession = Fewer Jobs

There were fewer jobs to go around in those prime years of the recession, 2008-2010. It became so commonplace for unemployed workers to get discouraged by the lack of prospects and quit looking that ordinary people who’d never taken a single economics class could suddenly tell you that unemployment rates were actually even higher than they looked because they didn’t account for discouraged workers.

2. Discrimination against the long-term unemployed is completely legal

There are some pretty scary stats out there (this piece in the Atlantic breaks it down especially well) showing how doomed the long-term unemployed are in looking for work, because employers simply disregard resumes for those who’ve been out of work for as little as six months. Adjusting for every other factor — age, education, experience, gender, race, household income — people who were out of work for six months or longer faced and still face an innumerably steeper climb to finding new work. As Matthew O’Brien writes in The Atlantic piece, “Circles don’t get more vicious than this. The people who need work the most can’t even get an interview, let alone a job. It’s a cycle that could end with the long-term unemployed becoming unemployable.” As he put it in a different Atlantic piece, “In other words, the first thing employers look at is how long you’ve been out of work, and that’s the only thing they look at if it’s been six months or longer.” And if all that isn’t terrifying enough, 60 Minutes reported that this type of discrimination is unregulated and therefore legal.

3. Ageism happens

The stats on long-term unemployment get even bleaker once you start talking about people over 50. As Ann Brenoff writes in a piece on HuffPo:

In reviewing results of the U.S. government’s 2014 Displaced Worker Survey, researchers found that someone 50 years or older is likely to be unemployed for 5.8 weeks longer than someone between the ages of 30 and 49, and 10.6 weeks longer than people between the ages of 20 and 29. The study also found that the odds of being re-employed decrease by 2.6 percent for each one-year increase in age.

And that’s not even the worst stuff in that article. To me, the worst is this line: “The study also found evidence that older workers find jobs that are lower in pay and less personally satisfying compared to their previous jobs.” Want more depressing proof? Read this New York Times article, which quotes Dr. Alicia H. Munnell, director of the Center for Retirement Research at Boston College, as saying that once a worker over 50 is out of work, “it’s horrible.”

Retirees Can’t Bank on Similar Work

For early retirees and those of us aspiring to become them, all of this should serve as a major reality check. Sure, many of us are planning not to need to work again, but a lot of us still say things when talking about our financial plans like, “If all else fails, I’ll just go back to work.”

Sadly, it’s unlikely that “just going back to work” will really be an option for most of us, especially after a relatively short period of unemployment, and especially especially if we’re over age 50 when we realize that we need to go back.

Add to all of that the realities of economic cycles. If the markets keep going up forever, most of us will be sitting pretty. Our net worths will keep climbing even as we spend our annual allotments. No problem there. But when the economy starts tanking in some future recession, our nest eggs will become worth less, and suddenly there’s a very real risk of depleting our assets too quickly, or even running out of money completely. This is the time when retirees are most likely to need to go back to work, and it’s exactly the moment when work will be hardest to come by.

Keeping the Possibility Alive

If you truly want to keep going back to work in the same industry or in a similar position on the table as a future option, do yourself a favor and do these things:

Keep a foot in the door — If you might want to go back in the future, consider semi-retirement instead of full retirement, and keep doing similar work in your industry on a part-time or consultant basis. While there could be future challenges in going from a self-employed position to a staff position, they are likely to be less onerous than trying to get an HR manager to call you back after a gap of many years.

Stay in touch with potential references — Your references will become more important than ever if a future hiring manager is considering taking a gamble on someone who’s been out of the game for a while. Make sure you keep in touch and share updates on relevant projects you’re doing, even if you’re doing them completely for fun.

Keep up on industry trends — It is getting ever-easier to become obsolete in any given job or industry. Don’t assume you’ll be able to pick it all back up in the future, but instead keep following industry news and trends, and stay current on the technology and tools you’d need to do the job again.

Check your ego — It simply may not be possible, no matter what, to go back to work at the same level you previously held. If going back to work is really your back-up plan, be prepared to swallow your pride and go back at a more junior, lower-paid level. Or to do work that’s less satisfying. Research shows that that’s the reality, especially for workers over 50.

Or, if you think that doing all of that sounds a lot like, you know, WORKING, then it might just be time to accept that going back to a previous occupation is not a realistic back-up plan. That doesn’t mean that work has to be off the table completely.

The Other Options for Work

Working to earn money doesn’t have to equal being a full-time employee of a company, but that model does require the least upfront work for the worker, and also provides the fastest payout — it’s why a lot of us on the FIRE path work for other people, even though The Millionaire Next Door insists that the fast track to wealth is starting our own businesses.

But let’s say full-time employment with a company is off the table. There are still plenty of other options: starting a small business, consulting for companies, making and selling things online, and any number of other things you might call side hustles while working full-time, but which might become primary hustles after FIRE.

The most important thing to remember with any of those options is: In a recession, everyone buys less of everything. So whatever it is you’re selling, expect to sell less of it. Also expect to build that business before the recession hits, which means: build it when you don’t actually need it. Because building it when no one’s buying will be ten times harder.

There’s always hourly work, too, but make sure you’re mentally prepared to be a Walmart cashier for minimum wage before you commit to that being your contingency plan. And even those jobs get harder to get when the economy starts slumping.

And if these other options for work also sound like more work than you want to do in retirement, then make sure you have a robust contingency plan that relies on no work at all — things like a large emergency fund even in FIRE, rental property you can liquidate, a retirement budget that’s significantly padded so that you can cut it back dramatically if you need to, and tax-deferred funds you leave alone so that you can tap them only if you absolutely must — these are great places to start.

Your Take

What’s your biggest lesson from the 2008 financial crisis? What’s your backup plan if your FIRE plan doesn’t go as you hope? Do you think our concerns about being able to go back to work are overblown, or are you looking at other options like we are? Let’s discuss in the comments!

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106 replies »

  1. When 2008 hit, I was completely oblivious to what was going on since I was only a junior in college and I lived within that bubble. Sometimes, I think people hope for recessions or market dives too much so they can take advantage of sales on stocks, but they forget about the other bad things that come with it (myself included). But I do know that having down markets is good for preparing us for FIRE so we don’t overreact when things go bad with our portfolios.

    You make great points – before retiring early, it is important to really grow and cultivate your network because if you ever need to find some work again, those will be the people you will need to leverage, especially if you have been out of the game for a long time. Great post!

    • Thanks, Thias! I’m sure you haven’t hoped for actual recessions, but just for short-term stock sales. Totally different. And it’s such a good point that learning to live with market volatility is important, since that’s the reality!

  2. I know I’ve thought and said that going back to work could be a not terrible worst-case solution in early retirement. Thanks for sharing all this research! It’s very sobering. As someone with an already 2.5-year gap in my resume, I have come to terms with the possibility of not going back into the same type of job ever again. I’m fine with that, but I imagine the types of jobs you could get at 50+ with a larger gap wouldn’t be ideal. It’s awesome that you’re thinking through these topics and sharing it!

    • I know this topic is a little doom-and-gloom, but it’s important to be realistic! If that means working a little longer and saving up a bit more of a cushion, then so be it. You guys are still young, so I’m sure going back to work in some satisfying role is still on the table for you, but it’s good that you’re accepting that you might not be able to go back to the same type of job. Better to be realistic. Though of course I hope that the statistics don’t apply in your case when you’re ready to go back! :-)

  3. For me, 2008 taught me a lot about company loyalty and what not to expect. I was a senior in high school and the large, global manufacturing company headquartered in our hometown told all of the co-op students to not come back. Not to mention every person they laid off.

    Flash forward 4 years to my current company which is ironically a competitor of that first company. They kept all their part time students and tried not to lay off that many people. It was a great lesson in what companies will do in hard times.

    • Wow, that’s a tough lesson to learn at an early age! But I suppose, sadly, that it’s an important lesson, too. And you’re so right that different companies make different choices, and it’s important to try to work for the good guys!

  4. The 2008 crisis taught me that real estate can be a real money suck. We bought our house the summer of 2008, because we were both finishing school and starting work early that fall. It was a work sponsored move, but that didn’t help with the price. We ended up buying right at the housing peak, but the price was also driven up due to people relocating from New Orleans where Katrina had hit 3 years previously. A couple of our neighbors said they bought their houses in our neighborhood sight unseen because they needed a house (theirs was washed away) and when places came up as available, they’d be gone the same day or next day at the latest. Even 3 years later, the demand was high! When we sold our house 5 years later we got ~$30k less. Our company buffered the loss to within 10% of purchase price, but that didn’t make up for the floors we put in, the back patio, and all the other upgrades we added to it.
    Second thing I learned was that you are just a cog in the machine. There was another O&G downturn around then as well and then when BP blew up their rig in the Gulf, our industry got hit pretty hard. I think that was when Mrs. SSC started looking into ER blogs while we focused on paying off debt and not inflating our lifestyle to the point of needing both 6 figure salaries. Granted, that downturn was short, but it opened my eyes to the reality of the cyclical nature of O&G.
    The 2008 crisis and other financial issues with our industry drove home the point that we’re an employee, the company sees us as a number on paper, and we should try to get ourselves set up for living on lower paying jobs with no debt, so that’s what we did.
    If things go south with our FIRE plans, well, Mrs. SSC teaching is a good way to buffer that transition, and I’m not above going back to geotech engineering work, even if it’s just a summer employee sort of gig, since those jobs pop up during the summer when there’s more activity and die down in the winter. That’s how I got my foot in the door to that engineering job I did for 6 years. I still have contacts from that company in 3 different companies, so we’ve discussed even moving out to CO and taking a gig with one of them to transition our FIRE and see if we really can do it. :) But, that was before Mrs. SSC got an opportunity to teach, so that is our current transition plan.

    • I was thinking about our back-and-forth last week when writing this, and how you guys are probably the exceptions in that you could go back to work! But of course I hope for you that you never need to. :-)

      I didn’t know that you guys had to sell a home at a loss in the recession — I bet that was scarring! And yeah, I’m sure it was rough riding out that period in your industry! Even though we both feel the ups and downs of the economy in our jobs, we for sure don’t feel it the way you guys do (or Prof. SSC did), since O&G is so reliant on pump prices which can be countercyclical.

      I see Prof SSC’s jump to teaching as a major hedge for you guys — now your household skills are diversified, and you have multiple fields to fall back into — so smart! I know that’s not why Prof SSC made the move, but it just seems like a win-win, despite the pay cut.

      • I agree, the teaching route could be a HUGE hedge against “going back to work.” While that wasn’t her main reason in taking the job, there was a LOT of debate for that very reason.

        Mainly Mrs. SSC debating whether to just stick it out and be “done done” in 2 more years, or take the big pay cut, still be able to be “done” in 2 years, at least for me all the while having a position that could be transferable to anywher and in 2 years, we could go “anywhere.” It got intense at times, lol.

      • Oh, I’m sure it got intense! These are huge life decisions! :-) I wonder often if I could stomach giving up the big paycheck for a much smaller one, and the fact that I haven’t done it probably speaks volumes. But you guys get all the high fives for making a brave choice in favor of pursuing a passion while also giving yourselves a nice financial hedge. :-)

  5. I absolutely worry about FIRE assumptions I see floating around especially when they ignore the very real harm that other humans will face as a result of recessions.

    I do own my own business, but my clients would be able to pay less if they weren’t working. I’m in the type of business that is always a need, but I will have to be very flexible with terms should the economy hurt. However, I have worked fast food before and would be able to do that. It would be hard on my body, but it would be something coming in. My dad retired from US government jobs and began cleaning a laundromat for 15 hours a week. Simple, easy work. Got him over the hump.

    I worry that people who assume they can use their US passport and slow travel the world are not taking into account the volatility in the world. One of the nastier things about Brexit has been the assault on people perceived to be foreign. So many slow travelers don’t think this could happen to them. I also worry at the idea that you are traveling through communities long term and never really becoming a part of it. It does not seem neighborly.

    • So many important points you make! Speaking of human harm from recessions, we talk often about how we’d want to be able to increase our charitable giving if times got tough again, rather than decrease it as most people do, since it’s in recessions when social services get most stretched… but of course that’s easier said than done. If we end up ahead of our targets when we quit next year, maybe we’ll set up an angel fund like Mr. Fire Station has so that we can still give in bad times.

      And travel! Yeah, the world seems to be going in a more volatile direction, for sure. BUT, all the news reports also skew our perceptions, and in reality we live in the most peaceful era the world has ever known. So it’s hard to know what the future will hold. Though I think about Matt from the Resume Gap and his partner Daniel, who just barely escaped the Istanbul airport terror attack yesterday, and it’s a reminder that these terror threats are real not theoretical. :-(

  6. As someone who graduated college in the middle of the crisis, wow, did I learn about the job market fast. Teaching has done a 180 since then. Now, there’s a huge shortage of teachers. When I was first getting started, though, it seemed like everyone and their uncle who got burned (or was burned out) in the business world went back to pursue teaching certificates. The market was totally flooded. I managed to land a job, but then I got RIFed two years in a row. That district really never recovered financially. Tough lesson to learn and wouldn’t wish it on anyone. But, I’m much wiser for it now. And there’s enough distance between it and where I am now that allows me to look back on it and mine it for wisdom.

    • Thank goodness you managed to get through all of that without bitterness — I have talked to some teachers who went through similar things to what you describe, and they got so bitter about it all that they don’t see the lessons. I definitely empathize, but also think we all need to be realistic. I’m glad that teaching generally is in a better place now, and I hope you feel more secure these days than you did in those dark years! Now we all just need to work on getting teachers paid according to your massive contribution to society! :-)

  7. We are planning for ER with an average spend of $35,000 per year. As such, if we need to, just pulling in an extra $10,000 each doing ANYTHING would probably keep our retirement savings in pretty good shape. Recessions don’t usually last that long anyway (a couple of years at most), I would just sharpen up the old blade on my lawn mower!

    • Most likely you’re right. But I find it sobering to keep these things in perspective: even to earn just $10K extra, you’d have to work half time at above minimum wage in most states ($10/hour) — that’s a lot of work for “retirement”!

      • True you would likely have to work part time if it came to that. But “retirement” is still “life’ and sometimes you just have to roll with the punches. We didn’t get this far without being a little flexible.

  8. I think it’s short-sighted to actively root for the market to tank. Like you mentioned, the recession caused a lot of hardship in this country, and it strikes me as incredibly selfish to root for a declining market just to buy stocks at a cheaper price. I understand, of course, the rationale behind the belief – and if the market does tank, buying up cheap stocks is an excellent response. But to *root for the market to take a nose dive*, in my humble opinion, is just downright horrible.

    I didn’t think too much about what was going on in 2008 during the market weirdness, other than how fast my home was sinking in value, day after day. I think I finally started realizing then that home ownership isn’t always the wisest financial decision.

    Having to go back to work is always a possibility, regardless of what some retirement calculator online happens to tell you. Things happen, and you’ve brought up excellent points to help keep yourself in the game throughout retirement. I can understand an employer’s hesitation when hiring folks who’ve been out of work for a while. That kind of instability is a potential risk to most businesses, and of course, they want folks who are knowledgeable and experienced with the current day’s work climate.

    I’ve come to realize, though, that the last thing I’d want is to go back to *this* business. Ever. Yes the money is good, but it’s the kind of work I simply don’t enjoy, so I’m not all that concerned about having to return to IT – at least in this capacity. I would consider contract work and smaller jobs here and there, and this is where your network (as you mentioned) is so important. Not only stay in touch with people whom you’ve worked with in the past, but also make new connections as you go, and ensure those people know what you do and what you’re good at.

    There are a LOT of opportunities out there. My folks, who full-time RV’ed for 13 years, have said many times that they could have worked a lot if they had to. Even seasonal jobs are available around Christmas time. These positions are often incredibly strenuous, but the larger point is options exist, and sometimes you gotta do what you gotta do.

    For us, we’re going to keep blogging and building up our YouTube presence for some additional income as we move into retirement. I’m always going to be open to contract work as we go, to pad the savings account in anticipation of the next recession.

    • I think rooting for market fluctuations is probably harmless, but yeah, full-blown recession has very real human costs, and it’s beyond bad karma to hope for that! Thankfully I mostly see people cheering stocks on sale and not actually wishing for a full market nosedive.

      I do think being location independent will make things easier for you guys should you need to work again — you mentioned seasonal work, and I’m specifically thinking about things like Amazon’s holiday season RV force, where they pay you a little better than minimum wage to pack boxes but then give you a free hookup for your RV. If you’re in a position to grab work like that, then you can get a leg up over people who are stuck in place!

      • I’ve read that the Amazon gig, while popular and lucrative, is very, very hard work. Hard both from a physical perspective and also from an hours perspective. Many, many hours on your feet standing and walking. Courtney isn’t too keen on this particular work, but hey, you never know. Like you said, being in an RV can definitely put you in the right place for this kind of work, should you desire it.

      • I hadn’t heard that about the Amazon gig, but it doesn’t exactly surprise me! So that’s probably a bad example, but it’s still a real strength for the plan you and Courtney have that you can pick up and move easily if that helps you find work — though let’s hope you never need to do that! :-D

      • I had a family member who worked at Amazon for 2 years, and it was a hard gig. 12 hour shifts and during the peak season overtime was mandatory. She walked over 15 miles a day on hard floors. In the end taking so much ibuprofen her kidneys had some damage. But during the recession, that was the job that kept the bills paid.

        I’m so thankful we have multiple streams of income, super low expenses and a generous amount of margin. I don’t need to live high on the hog, but I don’t want to do jobs that suck. That’s a main perk of being “work optional”: no more crap jobs. =)

      • Wow — that’s good to know! Crossing Amazon off the potential future side hustle list! :-)

        The thing I like best about your plan is the generous amount of margin. That’s so important! I see some plans that have these thin margins, along with people assuming they can always go back to work, and that makes me so nervous for them! Better to have that healthy cushion and then let yourself be totally in control over what jobs you do or don’t take — including saying no to every crap job! :-)

  9. Like you, I came out of the recession unscathed. I was working for a large med tech company (until 2011) and we didn’t have layoffs because people still need medical devices despite the economy.

    It really scared me that it was taking people years to find jobs. The fact that the government had to extend unemployment speaks volumes about how bad it was. That was the lesson that I really learned and it made me determined to save as much as possible so that I could weather multiple years of unemployment if necessary.

    While I like the idea of retiring at 50 (in 10 years), I may keep working if I like my job and my health permits. Right now it’s just the option of ER that I’m striving for. Knowing that I could leave the workforce entirely if I was laid off would be a huge weight off my back.

    • You definitely learned the same lessons we learned from the recession! But thank goodness it motivated you to save instead of becoming a nihilist or something. ;-) Haha. And I totally agree on lifting that weight — when we hit the point when we knew we’d be fine if either of us was laid off, it did give us a huge sense of relief!

  10. You make some really interesting points in this post. Personally, it’s somewhat encouraging to someone who is aiming for semi-retirement, like me. The reason that we can’t fully retire early is because of our debt, but this circumstance will give us a bit of an advantage. Hopefully, the part-time work will continue to be enough to support us. But, as you mention, it would be much easier to go from part-time to full-time, as compared coming back to work from full retirement.

    • I was thinking of you guys as I was researching this, actually — thinking about how you guys will have a definite advantage by keeping some part-time work going! So yeah, I think this should be encouraging to you… and discouraging to those planning a full-time retirement. ;-)

  11. My biggest lesson from the 2008 crisis is that everyone is expendable, and I approach my current job with the understanding that they may lay me off at any time. My job was cut to part time in the recession. I lost a lot of trust in the organization I had worked for for the past six years at that point.

    For once I RE, having multiple layers of contingency plans is the way I like to look at this issue. If you are only relying on the back-up plan of “go back to work” you will be in trouble, particularly in a recession. My contingency plans include:
    1) dual income until we hit a net worth number that can sustain us at a subsistence level even with a 50% loss of portfolio value, even if both of us lost our job
    2) DH continuing to work (because he wants to) for several more years after I quit
    3) Never counting home equity in net worth
    4) volunteering to keep something on my resume
    5) social security
    6) cash buffer
    7) option to move to LCOL area
    Being flexible and able to adapt is critical.

    • I think a lot of us learned the expendable lesson in a big way! Though neither of us got laid off, we saw colleagues go who we thought were integral parts of our organizations. So, yeah.

      Your contingency plans sound a lot like ours! We do count home equity in one version of our net worth, but really only for informational purposes — we definitely do not plan to rely on that equity for cashflow at any point. But we do think about downsizing to free up capital as one of several backup options, along with moving to a LCOL area. And, like you, we have a budget that will allow us to cut back by 50% if we must. I know these plans help me sleep at night, so I hope they do the same for you! :-)

  12. Great reality check! I’m not there yet, but when I do retire I can see myself still wanting to keep myself somewhat busy with some sort of part time work. I’m curious to see what retirement will actually be like, but having a structure or activity will be necessary… whether it pays great or not!

    • Certainly it’s better if you don’t *need* the work, so you can do projects that are fun, and on your own schedule. But I definitely think some kind of part-time work is a great hedge against a bad economy so that you could ramp that up and work more if you had to.

  13. It will be extremely unlikely we will be working in FIRE to add more to our portfolio. The profession we are in would require us to be realistically in the hubs of SF, San Diego and Boston. Areas that are not at all in our game plan for FIRE and areas not conducive to managing cost of living efficiently (real estate, taxes, etc) . Our goal, being the conservative pair we are, is to over-save for our needs. To have a WR much less than 4%. We will also have a very decent income stream from what will be my former employer in addition to our taxable, tax deferred etc. Any “work” actually might be charity or kids school related or something else. Driven out of desire, fun and helping others. Who knows? We will see what opportunities emerge.

    Another blogger (think it might have been Mr. FS) mentioned in a recent exchange if you can’t live on half your portfolio, then don’t FIRE. Some truth in that one, for sure. Maybe a bit extreme in some respects but his point is well taken. That sort of approach should allow you to ride out the market downswings even if they are brutally severe. Like 2008, the market will come back, exactly when is the unknown. 3 years of expenses ( maybe more) in terms of cash on hand is the buffer to avoid the permanent damage of selling out of funds at a low. Protection of our portfolio was something we did too much of after 2008 and we got too conservative with some allocations. But it will be the mantra we will follow in two years time when the biweekly checks disappear.

    • I think your plan not to work sounds very smart and practical! And I can understand your desire to be in the mountains instead of in one of those few cities — you know we heartily endorse the mountain living. ;-) I agree with you and Mr. FS that you shouldn’t RE if you can’t live on drastically less than you expect your nest egg to provide. I see some plans that have a razor-thin margin and I get genuinely concerned for those folks! And then if they also say, “Well, we can always just go back to work if we fail”… that’s why I had to write this post! :-)

  14. I’m going to go one step further and say forget the 50’s, employers don’t want you in your 40’s. I actually had a hiring manager (younger than I) ask if I had heard of Facebook. I’m old, but not THAT old! Plus, I keep losing out on opportunities to the younger workers who are willing to work for half the salary. Another obstacle many of us will be forced to face is automation and outsourcing. This hit close to home as well where my once very secure finance job was outsourced to India.
    I think 2008 was a wake up call for a lot of us. Thankfully, we also got through it unscathed as well, but it serves as an important reminder to always have a contingency plan!

    • How did you not punch that person?! I’m exaggerating, of course, but really?! “Have you heard of Facebook?” !! Isn’t every grandparent on FB now? Geez, how insulting!

      And wow, your job got outsourced! I feel like we don’t hear about that anymore — like it was just a brief trend — but it must be quietly happening still. Glad you got through 2008 unscathed, though!

      • It’s definitely still happening. My former company (a very large book publisher) is sending (and has been sending, for years) more and more work to India and now the Philippines. It’s one reason I quit in 2014 after working there for 12 years. Writing was on the wall. I worry about my long-term working future. I’m almost 40 and my skills are more “old world” in many ways (pre-Internet). Trying to change that. I was laid off in 2002 post-9/11 and then again last year (mass company layoff). My current job is in my field but pays almost 15K less. It’s been an adjustment, and not an easy one. Trying to live more frugally and get our savings back up. One thing that helped me was the side hustle. When I was unemployed, I still had some freelance work. Then I took a very low paying job just to get off unemployment and not have a real gap in resume. Then the current job presented itself. Thanks for this great post!

      • Wow, I guess it shouldn’t be hard to believe that outsourcing is still a thing — just haven’t heard much about it in a while! But thanks for filling in this info. And gosh, it seems like you’ve been impacted by just about every economic downturn and negative employment trend — I’m sorry! Though kudos for building a solid side hustle and building your “new world” skills up, and of course for changing your financial habits! I hope your career goes more smoothly moving forward, but also that you can make an exit sooner rather than later if that’s what you want. :-)

  15. Thank you for addressing this! I worry about difficulty reentering the job market after FIRE if my husband or I need to work for our mental health, not just for financial reasons :D. But that is neither here nor there.

    I can attest that is difficult to reenter the job market after taking a time out. I took a year off to relocate and stay home with my baby. I spoke to some HR reps at job fairs who were openly snarky about the resume gap. I can only imagine what they would say had I applied on the company website. I will say that applying in person through job fairs at my previous university far and away produced the best results. Maybe making a good impression and explaining that you left your previous role voluntarily, but still enjoyed the work, can make the skeptical reconsider.

    • You’re welcome! I know it’s not the rosiest topic, but I think it’s important to at least consider. I guess it’s not super surprising, but I’m still disgusted that HR reps would have treated you that way! I mean, having a kid and staying home for a little while is a totally reasonable, common thing to do. That’s a great tip about applying in person for a better result!

  16. Back in 08 I was in high school, but my mother was a real estate agent and lending agent in one of the markets hit hardest by the housing collapse. It’s hard for me not to be snarky about it but the recession reinforced for me that being poor or middle class in our society is inherently risky. Negative consequences of overleveraging, risk, and poor decision making do not apply to large corporate entities and those that run them in proprtion to the damage they can cause.

    • Preach! The people destroying our economy rarely have to answer for what they’ve done, and yet millions of other people with far fewer options end up paying the price.

  17. I’ve often heard you shouldn’t count on going back to work in a recession because jobs are hard to come by. But I’m not sure it’s as bad as that. The worst off person I saw during the Great Recession was my good friend and former coworker Jon. He was on unemployment for 99 weeks (the max) and had a really hard time finding work. The odds were stacked against him though. He was a lazy slacker (though still a good guy!) and he was blind (couldn’t drive, could only see a computer screen from a few inches away). Hard to be a project manager or do field work in our field of engineering without being able to see well enough to drive to meetings and to field investigations (let alone read maps, QC work of others, etc).

    He eventually found a smattering of part time work for a couple years that paid a little less per hour than what he used to earn but kept him engaged in engineering and filled a gap on a resume. A couple years later he landed a sweet staff engineer position that came with a salary tens of thousands of dollars higher than what he was earning pre-recession. And he gets straight overtime (we’re talking going from $58k pre-recession to six figures today).

    My lesson learned is that it won’t be that hard to find some form of work, but it might be temp work at a lower salary than I used to earn while in engineering full time. Although in my case, I’d probably hustle a little harder at my blog, do some freelancing writing or computer stuff, or do 1099 engineering consulting instead of trying to go back to FT work during a recession.

    And at the end of the day, it helps to have a low spending rate compared to what you used to earn. At half my former salary, I could replace half our spending needs with a half time job (letting my portfolio cover the other half of our spending).

    • I don’t know — 99 weeks sounds like a crazy long time to look for work! I’m sure some of it is also relative to the region you’re in, and certainly some places got hit harder than others. I’m glad things worked out for your loveable slacker buddy (ha!), but an early retiree wouldn’t have the benefit of unemployment payments to bridge that gap, and also just may not be interested in sticking it out long enough to get the sweet gig that Jon has now. I think you’re right that finding *some* work is much easier than finding the work you might want — and your blog is a perfect example of something you’ve built when times are good, but which you could leverage more if you needed it in tough times. And amen, brother, on the spending point! Being able to live for very little is always the best hedge of all.

  18. All very good points and very true. After I payoff my massive debt, I plan to stuff as much money as I can into a fully funded (1 yr!) emergency fund and other savings vehicles. In the Great Recession, people who had cash were the ones who had options. They got investments of every stripe at a fraction of the price. The next time we have a big downturn, which I hope is many years away, I plan to be the woman with cash, not problems.

    • I love your plan! We’re big fans of a hearty emergency fund, and a little oversaving in other accounts. :-) And putting yourself in position to take advantage of opportunities will never serve you badly.

  19. I don’t root for the market to tank, but I do feel like another recession is coming soon. Especially given the contentious election going on right now.

    We did get lucky during the recession. We were already on disability and unemployment. So we were some of the few people who didn’t see a big reduction in circumstances and had dependable (if meager) income. And when we moved down here to Phoenix, the housing market hadn’t recovered. So we were able to get a foreclosure for $60,000. Even with upgrades, it came to $85,000. We got a ridiculously low mortgage and allowed us to give his parents a place to live.

    I feel bad for doing well off the misfortune of others, but I guess the next time around we’ll be better poised to a) throw money into stocks that will be cheaper and b) be sure we try to help people who are in as bad of situations as we were back then.

    • I’m super impressed that your inclination in the next recession is to try to help people who are worse off — that’s so admirable! And remember: given the real estate crash, we *needed* people to buy up those properties, even at low prices, to get to a point where a recovery could begin. :-)

  20. Wow, this article was written for me. Am currently 50 and recently retired early. Everything you say is true and the thought of not having a contingency plan is very scary.

    I have no plans to go back to what I was doing more recently which was operating construction machinery, or further back, business development. I know, there’s a story there.

    I do have a sufficient buffer in property and other investments which is why I came to the conclusion I could retire. However, I’m currently setting up a small online business, partly to keep my mind working, but also to generate some income to supplement the investment income.

    The thought of having to go back to work in some junior or menial job is too scary to contemplate.

    Great post and very timely too with many retirees taking a hit on their investments this past week. Although I do believe it will be short lived it does remind us of the venerability of not having a diversified portfolio.

    • Congrats on retiring early!! That’s such an incredible achievement. You get all the high fives today. :-) It sounds like you’re thinking about it smartly, with your investments and property buffer, and the additional income stream you’re working on. Better to do it now than have to scramble when times get tough!

      • Why thank ONL and yes, I’ll take all of your high fives too. It’s only been three months since I chucked it in but the longer it is, the less inclined I am to ever go back and work for someone again.

        I have been lucky with my property investments being in an overheated market but I guess one has to take the good when it comes along.

        In saying that, If I’d started planning FIRE in my 20’s I could have retired 10 years ago. I take my hat off to those of you who are doing this in your 20’s and 30’s, possibly making some sacrifices to get there but it’s definitely worth it in the long run.

        Thanks for stopping by and commenting.

      • That’s all so great. As long as you’re not taking advantage of anyone else, there’s nothing wrong with benefiting from a bit of luck and good timing! :-) It’s funny because we didn’t get started until our early and mid-30s and we see people in their 20s saving… and then WE feel like we got a late start. Haha — it’s all relative!

      • I didn’t really start investing and doing smart things with my money until I was 36. Coincidentally, that was when I divorced someone who’s ability to spend money far outstripped their ability to earn and save. Live and learn eh.

  21. The recession was not good for us. My husband lost half his income and we ended up having to sell our home at a loss. Bad times, but they have made us stronger and that is how I choose to look at it. Positivity goes a long way sometimes :)

    • Wow, that sounds rough! Sorry you guys got hit hard by the recession! What an amazing thing, though, that you came out of it with a positive outlook!! :-)

  22. Ooft, this was a hard post to read. In some ways, this is what makes ER so scary – so many more years of retirement spent not working and open to potential vulnerability. Still, I think I’d prefer the risk of that to the risk of not having enough money to retire at all (in a world where I get to choose, and those are the only two choices).

    I think there are some good points made in the comments above – not including your primary residence’s equity in your portfolio/net worth calculations for example, or at least being extremely conservative with the value estimates.

    For me, being only 25, and planning to retire somewhere between 35 and 40, I can’t even imagine what I’ll be doing at that point, and what I’d want to do after that point should things go south. It’s a good reminder to be thoughtful about diversification, multiple income streams, staying up to date on skills, and generally being conservative in terms of withdrawal and the size of the nest egg needed to retire.

    • I think it’s important to have these reality checks, but my goal certainly wasn’t to scare you! :-) Just to encourage us all to be realistic about our backup plans, maybe to oversave a bit, and to make sure that your plan has flexibility so that you can cut your spending way down if you need to… plus all of what you said! :-)

  23. Still keeping the “foot in the door” since I left full-time work by doing the consulting you suggested. As a teacher, there will likely always be “similar” work in terms of substituting in schools. The pay is low, but I don’t believe there would be a time when I couldn’t find work. You are also right about keeping in touch with references. It is “all about who you know” much of the time. My last full-time job was offered to me because my last supervisor suggested me. Don’t burn any bridges as you may never know when you may need someone to put in a good word or suggest you for a position.

    • Not burning bridges is so important! That’s great you’re doing that consulting so that you can always ramp it up if you need to. And substitute teaching seems like a great option as well — it would probably never be enough to support someone with no other income sources, but can certainly be a nice supplement!

  24. I only benefitted from the 2008 crisis as my money wasn’t in the game until the aftermath. That being said, ir have read a ton about the 2 most recent crashed as a prep course for when it happens to me in the future.

    I don’t think your thoughts are overblown, older employees get passed over for younger and cheaper ones all the time – the average age of my current company is 28 and we have 1300 employees across 5 countries!

    • Whoa, that’s crazy! Average age of 28 out of 1300 employees! That seems almost impossible to achieve unless you’re making a deliberate effort to hire the youngest people possible.

  25. Thank you for this great thoughtful post.
    Any crisis anywhere in the world, big (worldwide or countrywide) or small (within our circle of family or friends) always reminds me to be ever so careful in spending as well as in planning.
    I am just scared to not have enough, because I have seen it from close (some family members) and even lived it with my husband and our kids, due to us relying on one badly paid employment that lasted for two years.
    So my (our) way to react to this is preparing for retirement (maybe ER) making sure we really actually have too much – fingers crossed, not because of the fantasy of wanting to be “rich” but just because I am weary of all the different downturns that can potentially happen.
    If we end up really with too much, there will always be opportunities to bless others…
    For now, when I tell my friends or colleagues that I am saving every single penny I earn (I tell them that I pretend I’m not earning it so I don’t touch/spend it), they look at me like they have no idea what I am talking about; it is likely the first time they hear about someone not spending a dime of their income. Then to take them out of their misery I explain I am saving for a downpayment, I can see a bit of relief in their eyes. It is in fact the fourth property we are saving for, but I won’t tell them that as I don’t want to see them faint :) .
    To get back to the question, in fact ER for me is distant. Reaching FI is the most important part of it, as a safety net in case one of us is laid off. Once FI is reached, I do want to increase the level of independence to avoid what you explained so well…

    • Thanks for saying that, Anne! :-) I admire you for being so thorough in your planning and saving! I suspect that you probably are saving more than you need, but I’d certainly rather everyone save too much than too little. At the same time, it’s a fine line, because we also aren’t trying to encourage anyone *not* to retire or to keeping working longer than they need to. Those who really crunch the numbers and would be comfortable downscaling your spending by half for a few years in the event of a downturn — those folks will be fine! It’s the folks retiring on a thin margin that I worry about and wrote this post for. :-)

  26. I felt the pain of not being able to find work after being laid off. For a couple years I think I felt that kind of discrimination you were talking about, but oddly enough so many people during that time became freelancers that I think in the end it worked to my benefit. However, there were many other downsides to my freelance life. I never want to put myself back in that situation ever again. Right now though I’m trying to find a balance between not being a hermit and do fun things now, versus saving for the future me.

    • You’re in an industry where freelance is definitely possible, which is not true for everyone. I’m glad you were able to make that work after a long period of unemployment, and I’m even more glad for you that you have a permanent gig now that allows you to do the fun stuff now! :-)

  27. I would agree with the overall sentiment of your post but I also think that your fears are overblown. The reason is that while we actually plan to incorporate some work, we don’t ever anticipate needing to replicate the income that we have made in our peak earning years.

    For one thing, unless we somehow managed to blow through our assets or had a “Black Swan” type of scenario, we wouldn’t need long term income. More likely we would only need to keep ourselves afloat for a few years to allow investments to recover. In that time, we wouldn’t need to save at the rate we currently do and most likely wouldn’t need to save at all. Also, by making only enough money to keep us afloat, we would pay far less taxes than we are in our peak earning working years.

    Figuring those two factors in, we wouldn’t need to replace what we make in our working years. I would guess something like 20-25% of that would suffice to support us, or at least supplement investment income, preventing us from having to sell off assets at a major loss. That seems like a pretty low bar to reach and even if it meant doing very undesirable work, it would be very doable for a year or even a few as a worst case scenario.

    • It’s funny… I’d say *we* aren’t scared of this, because our plan involves oversaving and more than ample contingency plans, as well as a realistic view that going back to work in anything like what we’re doing now probably wouldn’t be possible. If anything, I’d say more people whose plans involve a razor-thin margin of success should be doing some rethinking before they pull the plug, and that’s what this post is intended to spur. :-)

      Your point about not needing to replace your full income is for sure a good one, but people who say, “Well, I’m sure part-time work would fill the gap” often haven’t actually done the math. At $10 an hour, above minimum wage, it would still take about 20 hours a week to get to only $10,000 in a year… that’s a lot of work for an amount that’s nowhere near what most of us are making in our accumulation years. So this is just to encourage everyone to double-check their math. :-) Or, for people who do want to keep the door open to going back to work at some point, quitting completely might not be the best choice, unless it’s only short-term.

  28. Now that I look back, the Great Recession was actually the beginning or my own personal Fired movement. Although I was fortunate enough to survive that era financially unscathed ( mostly luck if not Mr. Magoo-like blind good fortune ), I did tell myself that if I somehow survive, I will never put myself in harm’s way financially..ever again. And certainly the unintended consequence of a down market led to a greater net worth on the other side of the Shawshank Prison Sewage System. :) Now that I sit smack dab in the middle of my 40’s…I fully realize that in my industry in particular that this is my last hurrah before I’m either sent off to the glue factory or mercifully laid off with a parting gift in the form of a severance package. Great topic, ONL…in a series of several of them.

    • Thanks for saying that! :-D Do you ever find yourself daydreaming about a fat severance package? On my more stressful days, I certainly do! ;-) I’m glad you made it through the recession unharmed, and also that it kickstarted your thinking about FIRE… silver linings, right?

  29. First of all I want to thank you guys for your honest and thought-provoking posts. I find you voicing many of the sometimes not fully cogitated thoughts I have. I am 51 and we have always been frugal, but until discovering FIRE I didn’t really comprehend the notion of early financial independence. We are actually technically completely capable of FIRE-ing now. Our net worth is a little over $3M (about half of it inherited, I will not lie!), although not arranged correctly for income generation (a negative ROI rental property my husband doesn’t want to part with is the main burden). My husband was inadvertently retired in 2009 after his layoff and never even really tried to find another (nonexistent at that time) job (he’s 63 now). I am a lawyer, and I know if I lose my job at this point, I am almost guaranteed to have an extremely difficult or perhaps impossible time replacing it. One of the things that make this FIRE thing difficult for me is the fear of throwing myself on the mercy of my own savings and economic trends. We do have two children who are nearing college and that expense is hard to predict (is it going to be the $100K state school option? Is my daughter going to med school as she is planning, and don’t we want to help??). So I have been thinking hard about options for my retirement career. Yes, retirement career! Continuing to work but in a completely different industry. So right now, I am taking the prerequisites at community college to do a one-year B.S. in nursing. Nursing is a career that has high demand, good portability, and a reasonable income. Plus when you leave your job for the day you can forget about it! Anyways, I appreciate your thoughtful posts.

    • What a nice compliment! Thank you! :-) I’m sure you know this, but nearly everyone in the FIRE community would be THRILLED to have your net worth, and many would probably think you’re crazy for not having retired already. But I understand your concerns, especially with the uncertainty of college and grad school expenses looming on the horizon. I love that you’re taking the step of training to be a nurse, probably among the most practical careers out there in terms of demand and portability, as you said. And, it seems, also something you can do part-time instead of full-time, so you can make your life a lot less busy than you must be as a lawyer now. I’m wondering if, in addition to your retraining, if you can also take some steps to structure some of your net worth so it’s more of an income source. Even if the rental is off the table, can you move any other assets to provide passive income? Hard to know without knowing how your things are structured, and I’m sure you’ve already thought of this. :-)

      • If it were up to me, I would have probably already structured things to retire. Our net worth includes 2 wholly-owned SFH rental properties in our college town, so there’s a nice income, but expenses like property tax, hazard insurance, and the maintenance/repair/upgrading (I’m not a slumlord) do add up. Our house is probably too big. If I could do it over I wouldn’t have built such a big house (2700 sq ft). The third rental property with terrible ROI is actually a property with a SFH but has quite a bit of land attached, so a lot of the value is in the land, and renters don’t pay for land :-). It’s my husband’s dream property and he won’t part with it. Our home and this other SFH both have mortgages. As you can see, one of the important parts of FIRE is to be in complete agreement with one’s spouse. I simply can’t get him on the same page as me about no debt! While there’s this debt, I can’t really pull the ripcord. So I’m trying to work until the home debt is paid off. There’s a lot of 401K money too, but I don’t want to tap that any time soon. Additionally, if I could hold the line that my kids pretty much have to pay for their own college (the MMM way), that would simply things greatly. But as I said, I want to help my kids with college.
        Don’t get me wrong. I have a very “high class” problem. I sleep SO much better at night than I did 10-15 years ago. Things could be rearranged in a hurry if need be and we have a lot of options. I certainly would absolutely and totally encourage working towards financial independence! I feel so lucky to be in this situation. But again, the uncertainty of this world makes it so that I’d sure like to have a post-retirement career that is something other than being a Walmart greeter. And I do have some non-MMM tendencies as well. While I love nothing more than a wonderful backpacking/camping trip (I’ve done two llama packing trips in CO and WY the last three years with the family), I also like going to Hawaii. I want my next car to be a little more upscale than my 7-year-old Subaru.

      • That all makes sense. And I can see why your husband has dug in on his view, too — it’s a good reminder, indeed, of how important it is to agree with your spouse on this stuff! And it’s good of you to acknowledge that this is a first-world problem, but that doesn’t mean it isn’t allowed to be stressful. And we’re not ever going to tell you that you have to give up those little luxuries if they bring you true joy, though we completely love our Subaru. :-)

  30. The industry is spent the great majority of my life working in, excelling at and perfecting my skill level in went away completely in the Great Recession. I went from a six figure income to unemployed in a very short period of time, and had to rebuild my career late in life, starting at less than a fifth of the income I’d become accustomed to. My spouse was laid off at the same time, and spent three months looking for work. We stayed afloat (barely), used up savings and took cash advances on credit cards (I know, I know)…but we made it through and gradually started getting out of debt and rebuilding our net worth. The lesson wasn’t lost on me that no amount of preparation is enough, and the unexpected can be far beyond the realm of the most dire “what if” scenarios you can dream up. That’s what concerns me about debt (even mortgage debt or zero interest debt). Those days of sheer panic and sleepless nights haven’t faded enough from my consciousness to allow me to relax and enjoy our nest egg, although our income stream of two pensions and social security is more insulated than most. The scars from that very frightening time are still raw enough that the only employment I would ever realistically entertain would be a minimum wage job; anything else would be gravy. Hopefully that day never comes, but if it does I know the drill: swallow your pride, interview for anything and everything, take whatever you can get and prove yourself to be the best hiring decision your employer ever made.

    • Whoa, your entire industry went away?? That’s pretty hard to fathom. Wow. And no judgment here for the decisions you made to get through the recession, including credit card cash advances — geez, if you needed to do that to eat, I think that’s completely acceptable! But I think the lessons you took away from it make total sense, especially since you learned them the harder way than most of the folks who’ve commented here that they weren’t too affected. Couldn’t agree more with you on debt — someone could always come demand you pay up, whether or not you have the means to do so. I’m thankful that you guys have a better retirement cushion than most — or, perhaps more accurately, I wish that more people had the cushion you guys have! ;-) And at least you live in a high minimum wage state, so that type of job would be paying you better than $7 an hour if you ever have to go that road!

      • I was an operations manager for a wholesale mortgage lender. Not only did the company I worked for go under, all the companies I had ever worked for either went under completely or stopped lending in the state (CA). Even if you’re completely legitimate and above board, it made no difference; the industry completely went away during the financial crisis and took years to return. Fortunately I was in management and was able to transition to HR, but many, many of my co-workers and employees lost literally everything.

      • Ah, well that makes sense! That’s certainly an industry that got vilified, deserved or not. So sad that so many people were hurt so deeply by the crisis. :-(

    • Accidental retirees, I’m also old enough to see industries change and know how one can get left behind almost before you even know you’re going obsolete. It also happens to workers in their 50s, they simply get pushed out by the younger generations (especially when a particular industry is not growing). This absolutely happened to my husband (see my note above yours). At 56 he lost his job because the company was relocated during the teeth of the recession (2009). Nobody was hiring, and even if they were, why hire a 56 year old to do the job that early 40-somethings could do just as well? If it wasn’t for me, with a high-paying job that survived those years, he would have been in a world of hurt. If I had been a stay at home mom, life would have sucked for us. We would have had to do many if not most of what you had to do. Being so close to that fate had a huge influence on me and the lessons of the great recession are not lost to me. It very much influenced my thinking about being FI and always being in a defensive crouch, financially speaking, especially as one gets older and later in one’s career. I see my ten-fifteen years’ younger coworkers living large (Beemers, country club, ski condos, private schools for their kids) and I would not trade places with them for one instant. Not even one. I would die of anxiety living that kind of life now!

      • It’s wonderful that you came out of that experience with a lot of gratitude for how lucky you all were to be able to adapt, and empathy for those who came out of it in worse shape. I agree with you — knowing what we know now, I would also not be able to sleep at night if we were hemorrhaging money on that frivolous stuff!

  31. You certainly can’t rely on anything but from our experience, as you say, if you are willing to go back to work at a lower level it is possible and employers need and want the experience that those of us over 50 have. We set off on our gap year in 2009. We were worried about the timing but we’d been planning and saving and decided to go for it. As well as the money for the year away in the van (http://candakubicki.blogspot.co.uk/) we also had money saved for six months without work when we returned in 2010. After a year relaxing, neither of us wanted to go back to stressful managerial positions and so we both very quickly (within three months) found new jobs in our chosen sectors (Health and University) at lower grades, so it can be done. We were helped by being mortgage free following down-sizing and frugal too and we’ve still managed to save so that we can retire early. We were also helped by employers needing our skills. I now work in admin and when we are recruiting I see the low standard of many applications and can see why I got a job so easily; getting an admin person with skills and education is such a bonus.

    • You guys are my heroes for having the guts to quit and do your gap year in the worst of the crisis — I know for a fact I wouldn’t have had the stomach for that! Bravo! And that’s fantastic to hear that you successfully found new careers at lower grades, though it’s sad to know that there’s such a low bar for hiring admin positions!

  32. I always enjoy your posts, because y’all think about (and plan for) the worst case scenarios, and I identify with that planning mentality. It’s smart to consider what could happen if plan A (portfolio/passive income) and plan B (“just” go back to work) both fall through. As with many other fields, I can only imagine how hard it would be to try to get back into medicine after a few gap years; treatments, electronic medical records, and billing criteria are constantly changing. That being said, I love the idea of semi-retirement. Taking a part-time job (for me, hopefully in a totally different field) would keep my mind active while also providing a little extra income and some added security should the markets tank. Excellent post!

    • Aw, thanks! Nice to know someone doesn’t think I’m being overly neurotic about this stuff — haha. ;-) I think semi-retirement is a great way to go if you’re not averse to working, for all the reasons you said — and I think what we’re seeing is that it’s better to plan some of that out before you pull the plug on your career, rather than just retiring and then saying, “now what?” :-)

  33. I’m not such a fan of this post. It makes me think that maybe I shouldn’t take any career risks or any career breaks and should just grind it out with the familiar until I hit my magical freedom number. But then I run the risk of experiencing some hedonism or developing a fear of withdrawal rates or tanking market or some other thing, and then maybe I never retire.

    The FI Lab over at Mad Fientist puts me at just under 8.5 years away based on my current assets and past 12 months of spending which is actually half a year ahead of my desired “hopefully by 40” timeline, but that’s such a long time away and so much could change with the flexibility needed in regards to a potential partner, so I’m not sure how helpful tracking the data really is, other than I suppose to pat myself on the back for not making overly stupid life choices in the now…Hmm.

    • That is definitely not the intent of the post! Our point was more to draw a line between when a retiree is likely to need more money because their investments are underperforming and when the employment market is also down. Taking a break when the job market is good (like now) is a different thing, as is taking that break when you’re in your 20s or 30s, as well as not taking a multi-year break.

      I think it’s good to be in the habit of tracking, even if you have unknown variables in your future. Chances are good that your income will increase before age 40 which should speed things up for you, so I really bet your timeline is shorter than that.

      • Ha. Thanks for the vote of encouragement! I mean, you definitely don’t have to twist my arm to call it quits if I mathematically get there before 40!

  34. Not just applicable to early retirees. Probably more so for traditional ones. Which is why I chuckle at those who say they will fix lack of savings by working well into their 60’s and even 70’s. Against overwhelming statistical and other evidence that won’t happen. Especially at primary career. A lot of folks are going to be disappointed.

    • I’m with you! Which is why I push so hard for folks to save a little more than the 4% rule dictates.